My question that i have found a property that is listed for $99,000 in Manassas, Va and I checked to see what the recent sales were, I found a sale in September 30 2008 for ($130,000) close price.
My hard money lender told me that they lend 65% of the ARV. I dont know how much work this property needs. My plan is to leave it like it is and try to sell it close to what the most recent sale sold for($130,000)
After doing the math the hard money lender will give me $84,500
What else do I have to worry about before I go and make an offer?
Mohsin - why do you think you can sell the property for close to $130k?
Some things to consider - you need to research your market and get some comps for the area to see for how much other houses have been sold recently. You may find that similar houses have been sold recently for much less than the $130k.
Even if the comps show that the house could sell for $130k, I suggest you consider all the costs to see if you get any money out of the deal. If you are buying a house for $99k, you will need to figure the closing costs for the purchase (which will likely include significant points from the HML), holding costs (how long will you keep the house until you sell it), marketing costs and closing costs for when you sell the house. After you calculate all those costs you may find out that you may not be making much money from this deal.
Be careful with the 9/30 sale. Are you sure it was a regular sale? If it was the bank foreclosing on the property, sometimes they capture the amount that was owed on the property, not the actual value of the property. If the previous owner owed $130k in a house worth only $80k, the records may show the $130k as the previous sale price. Which is misleading.
And my last comment - It seems that you haven’t done much due diligence and you are not planning to do it. (“I don’t know how much work this property needs. My plan is to leave it like it is and try to sell it close to…”) I would never do a deal if I don’t have a good understanding of all the variables/costs. I believe what I am trying to say is… real estate (at least for me) is a business where you need to get your hands dirty. So if you are not willing to invest the time and effort to understand all aspects of the deal and risks, don’t do it.
Hi - I do work in Manassas, Va too. Here’s a couple questions.
Did you find the property on the MLS - and was it listed for 99K. If so, there is no way you are going to be able to sell it for $130K.
Also, if the arv is 130K, the HML is only going to give you $84,500.
I’m also not sure that a HML will loan on something that you aren’t going to rehab. You would have to call around to find out,
If you are sure that you want to do this deal, and that the property is worth $130K, you will need to either bring private cash to the table, or get a contract that is assignable. I am assuming that you are trying to wholesale this deal?
Where is this property? My partners and I are looking to buy SFHs in Manassas park to rent and hold on until the market corrects. If you are looking to wholesale the property, we may be interested - depending on the deal and condition of the property. $130,000 is too much for us - unless the place is in rentable condition. E-mail me directly if you would like to discuss.